The 16th Finance Commission, led by Chairman Dr. Arvind Panagariya, held a crucial meeting with Uttarakhand government officials during its state visit. Key discussions revolved around the distribution of taxes between the Centre and the state, revenue needs, and development concerns specific to Uttarakhand.
Dr. Panagariya explained the current tax structure wherein the Centre collects income tax, corporate tax, cess, and surcharge, while states collect SGST, sales tax on petroleum, and excise duties. A portion of central taxes is redistributed among states based on the Finance Commission’s recommendations, which are revised every five years.
During the meeting with Chief Minister Pushkar Singh Dhami and the Finance Secretary, the state government emphasized its demand for a 10% share from the central cess and surcharge collections. Officials highlighted that while the 15th Finance Commission allotted Uttarakhand a 41% share, only 15% of the total budget was distributed based on population—a disadvantage for sparsely populated states like Uttarakhand.
The Commission noted that per capita income affects tax collection, with Haryana leading nationally. Other allocation criteria discussed included state area (15% share) and revenue-generating capacity (additional 2.5% share).
Uttarakhand also requested a special grant citing a 10–20% increase in forest cover, stressing its environmental contributions. The Commission acknowledged this achievement and assured that all points raised would be considered seriously.
The Finance Commission will continue its assessment by visiting various towns and panchayats across the state to gather public input.
